This Week In Washington
The Office of Federal Student Aid (FSA) released information about loan discharges under the Public Service Loan Forgiveness Program this week. As of June 30th, only 96 borrowers had successfully received loan forgiveness, totaling $5.52 million in discharged debt. Despite the small number of borrowers receiving forgiveness, there were approximately 28,000 borrowers who applied for PSLF, with the vast majority, over 20,000, being denied “due to not meeting program requirements.” Although FSA has not committed to doing so, it could release this information quarterly as this report was released in tandem with its regular quarterly status updates on its entire loan portfolio.
House and Senate lawmakers finalized a conference agreement on the fiscal year 2019 education spending bill. The bill includes a spending increase for education programs that was larger than either chamber proposed. The bill will now allow cancer patients to defer monthly payments on their federal student loans while they have treatment, and it continues to fund the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program that was created last year. The bill also sets strict new guidelines for the Department of Education’s (ED) solicitation and utilization of student loan servicers, including allocating students to servicers based on the servicers’ performance and giving borrowers who consolidate their loans an affirmative choice to choose which servicer they want. The bill passed the Senate on Tuesday and is expected to pass the House next week, but the President has not decided whether he will sign the legislation.
This week, the Government Accountability Office (GAO) published a new report, “Office of Federal Student Aid Should Take Additional Steps to Oversee Non-School Partners’ Protection of Borrower Information.” At the request of Representatives Trey Gowdy (R-SC) and Elijah Cummings (D-MD), the GAO examined how FSA ensures the protection of borrowers’ personally identifiable information (PII) by its non-school partners. GAO made several recommendations to FSA, including mandating that loan servicers and collection agencies are enrolled in a continuous monitoring program and set new baseline security guidelines.
The judge who ruled ED’s delay of the Borrower Defense to Repayment (DTR) regulations unlawful, has given ED until October 12th to present a new justification for postponing the regulations. In this latest ruling, the judge said he was weighing the potential harm to student borrowers caused by delaying the rules against the threat of disruption to the for-profit education industry by implementing the rules. If ED fails to come up with a satisfactory reason, the Obama-era DTR regulations could immediately take effect.
ED suffered another legal loss this week when a federal judge blocked the agency from executing its plan to stop using private debt collection companies to collect from borrowers in default. The judge said that “ED either did not have, or did not sufficiently document, a rational basis for its decision to cancel the solicitation.” ED had announced that it would cancel bids for new debt collection companies earlier this year arguing that the new contracts were unnecessary because ED was moving to its Next Gen enhanced servicing. The ruling prohibits ED from canceling contracts but does leave open the possibility of ED taking future action.
A few weeks ago, FSA alerted institutions that it had “identified a malicious phishing campaign that may lead to potential fraud associated with student refunds and aid distributions.” The alert included a sample email from an attacker, and FSA recommended institutions strengthen their online security and use multi-factor authentication.
News You Can Use
Due to declining birthrates in the U.S., the college-age population is predicted to decrease by 15 percent between 2025 and 2029, then fall steadily thereafter, but the impact on institutions’ enrollment will likely vary by geographic region and institutional selectivity.
A new report by The Institute for College Access & Success shows that while the percentage of college seniors who graduated in 2017 with student debt decreased slightly, the average student debt amount for public and private nonprofit college graduates only increased one percent between 2016 and 2017 to $28,650.
No relevant bills have been recently introduced for consideration by the 115th Congress.